In Romania PPI picks up by 0.9% y/y in Dec

The producer prices index (PPI) increased by 0.9% y/y in November, moving into the positive territory for the first time since September 2014, according to preliminary data of the statistical office released today. Actually, the PPI decline has been gradually slowing in the last half of 2016, mainly sustained by external price dynamics. The external PPI rise was the major factor triggering the index increase in December too, most probably over an industrial demand recovery and over the fx rate developments. Still, the producer prices slightly increased in the domestic segment too in the period, but less significantly. In monthly terms, the PPI rose by 0.8% in December, which was the strongest move up since August 2012. In fact, the PPI has been increasing almost in all months since last March.

Looking at the breakdown by main industrial groups, we note that the durable goods PPI reported again the strongest move up in annual terms, which is in line with robust consumption in that segment. Capital goods PPI and producer prices of non-durable goods remained on the rise, but with milder paces. Only the energy PPI decreased again y/y in December, but with a significantly softer pace compared to the previous months. The sectorial breakdown shows that the utilities sector had again the strongest deflationary impact in December. Hence, the PPI in the sector decreased by 4.7% y/y, remaining affected by falling energy prices. The PPI turned to positive territory in the mining sector, most probably over a rising demand for gas. Meanwhile, manufacturing PPI accelerated growth again to 2.2% y/y in December from 1.0% y/y in November and from 0.7% y/y in October. The moderate producer price growth in the manufacturing segment was mainly sustained by refining, road transport vehicles production and leather products manufacturing.

Yesterday, in Romania there were the largest protests since 1989. More than 250,000 rallied in Bucharest, major cities and towns nationwide, in protests against the government’s bills in justice that are seen to weaken fight against corruption. The protesters are asking the newly invested ruling to cancel the ordinances and step down, just about a month since taking over the power.

The two emergency ordinances were passed on Tuesday night, during an extraordinary government’s meeting that had on the agenda only the 2017 budget laws approval. After being on top of the public interest for weeks, the pieces of regulation were intensely criticized by authorities in justice, the civil society and the president of Romania.

The regulation takes away some of the prosecutors’ most important weapons in the fight against corruption, as it partially decriminalizes the abuse of office, narrows the coverage of conflict of interest offence, the criminal negligence would no longer be an offence, diminishes prison penalties for corruption-assimilated offences and makes major changes regarding denouncer’s regulations which diminishes prosecution’s powers and the possibility for a corruption act to be denounced.

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